Chapter 2: Theories about Business Government Relations Agenda Three models of government-business relations The shareholder model The strategic model The stakeholder model Crony Capitalism Why Study Theories? Helpful in understanding complex social realities Simplify and organize knowledge by describing patterns and regularities Offer different perspectives regarding the interactions between business and government. In practice they define the strategies, operations, and outcomes of businesses Three Models of Business and Society Business centered approaches Shareholder model Strategic business model Stakeholder model Note that there are other important “players” in society, in particular, religion The Shareholder Model Emphasizes economic principles Views business in isolation Emphasizes economic analysis and profit-making for direct or indirect owners Emphasizes the invisible hand at the micro level Stresses the importance of dynamic market Promotes non-intervention by government Contends the principle duty of government is to ensure that markets function properly, and to correct market failures Sociopolitical Environment Market Environment Business Shareholder Examples of shareholder model Economic freedom Index (Heritage Foundation) Rule of law Limited government Regulatory efficiency Open markets (Top in 2015: Hong Kong, Singapore, NZ, Australia, Switzerland, Canada, Chile, Estonia, Ireland, and Mauritius) Domestic example: Investment banks Various critiques of the Shareholder Model Downplays market imperfections Ignores the need for government vigilance and intervention to protect market failure In practice, tends to ignore the reality of business’ demands on government and the advantages frequently provided by government Too much emphasis on monetary and material gains The Strategic Business Model Emphasizes the practice of business and success One element: being highly competitive Most efficient and effective use of resources; Competing to win through hard work and cleverness Playing the game well The model also emphasizes collaboration Joining other strong competitors, networking, creating goodwill, focusing on comparative strengths Pragmatically, it wants: Moderate taxes and moderate regulations, stable policies, and protections in global competition To pragmatically use/exploit governmental resources Examples Council on Competitiveness Where America Needs to Be To drive US productivity, buttress our leadership in world markets, and raise the standard of living for all Americans, the United States must: • Immediately work to: – Ensure lower cost, easy access to high quality education and training for all Americans – Maintain long-term federal investments in science and technology leadership – Reform and simplify the tax code to stimulate investment and attract global capital to the United States • Over the next ten years: – Create at least 21 .

1. Chapter 2: Theories about Business Government Relations
Agenda
Three models of government-business relations
The shareholder model
The strategic model
The stakeholder model
Crony Capitalism

2. Why Study Theories?
Helpful in understanding complex social realities
Simplify and organize knowledge by describing patterns and
regularities
Offer different perspectives regarding the interactions between
business and government.
In practice they define the strategies, operations, and outcomes
of businesses
Three Models of Business and Society
Business centered approaches
Shareholder model
Strategic business model
Stakeholder model
Note that there are other important “players” in society, in
particular, religion
The Shareholder Model
Emphasizes economic principles
Views business in isolation
Emphasizes economic analysis and profit-making for direct or

3. indirect owners
Emphasizes the invisible hand at the micro level
Stresses the importance of dynamic market
Promotes non-intervention by government
Contends the principle duty of government is to ensure that
markets function properly, and to correct market failures
Sociopolitical Environment
Market Environment
Business
Shareholder
Examples of shareholder model
Economic freedom Index (Heritage Foundation)
Rule of law
Limited government
Regulatory efficiency
Open markets
(Top in 2015: Hong Kong, Singapore, NZ, Australia,
Switzerland, Canada, Chile, Estonia, Ireland, and Mauritius)

4. Domestic example: Investment banks
Various critiques of the Shareholder Model
Downplays market imperfections
Ignores the need for government vigilance and intervention to
protect market failure
In practice, tends to ignore the reality of business’ demands on
government and the advantages frequently provided by
government
Too much emphasis on monetary and material gains
The Strategic Business Model
Emphasizes the practice of business and success
One element: being highly competitive
Most efficient and effective use of resources;
Competing to win through hard work and cleverness
Playing the game well
The model also emphasizes collaboration
Joining other strong competitors, networking, creating goodwill,
focusing on comparative strengths
Pragmatically, it wants:
Moderate taxes and moderate regulations, stable policies, and

5. protections in global competition
To pragmatically use/exploit governmental resources
Examples
Council on Competitiveness
Where America Needs to Be
To drive US productivity, buttress our leadership in world
markets, and raise the standard of living for all Americans, the
United States must:
• Immediately work to:
– Ensure lower cost, easy access to high quality education and
training for all Americans
– Maintain long-term federal investments in science and
technology leadership
– Reform and simplify the tax code to stimulate investment and
attract global capital to the United States
• Over the next ten years:
– Create at least 21 million jobs
– Reduce unemployment to 5 percent
– Reduce government debt by $4 trillion to ensure America’s
long term solvency
– Invest $2.2 trillion in infrastructure to maintain competitive
advantage
– Double exports
Global Competitiveness Index; Community Banks

6. Critique of the Strategic Business Model
More balanced and realistic than the shareholder perspective,
but
Unclear and inconsistent
How do you decide your values when they compete and evolve?
The stakeholder model
This perspective sees business as critical to but nonetheless
subordinate to society
Stakeholders include not only investors, partners and
employees, but also customers, the community, government, and
other groups in society affected by business (e.g.,
environmental groups)
The stakeholder model
Creates duties toward multiple constituents of the corporation
While profits are important and one of the mainstays of

7. business, they do not crowd out other business and social values
in the stakeholder view
A long-term perspective encourages an attitude of
sportsmanship in competition, with the accent being on getting
better rather than simply winning in the short term
Pursuit of a good reputation for pragmatic purposes
Requires business management raise its gaze above profits to
see and respond to a spectrum of other values
Examples, company level
Annual listing by Corporate Responsibility
impact on the environment,
climate change behaviors,
avoidance of human rights abuse,
quality employee relations,
open corporate governance,
community-based philanthropy, and
financial integrity
Development banks
Examples, at the country level
Three stakeholder perspectives: quality of life, environmental
concern, equity
Human Development Index (UN) where US is very high

8. Environmental Performance Index where US is upper middle
Wealth distribution: Gini Coefficient (from .25 to .70 with low
fraction as the most equal); US in the lower middle
The stakeholder model
Critics to the stakeholder model
Unrealistic assessment of power relationships between the
corporation and other entities
Too vague a guideline to substitute for the yardstick of profits
Not clear who or what is a legitimate stakeholder
Comparison of three
modelsModelsShareholderStrategicStakeholder Role of societal
interestsComplete separation of financial and societal
interestsMix of financial interestsFinancial interests should
never override social goodIntegration of private and public
sectorSectors as separate as possible; regulation or financial
incentives for business as little as possibleSectors work together
and business benefit from government support Business sector
should not manipulate the public sector for its selfish endsSize
of governmentGovernment as small as possible; private sector
models are preferred Government being large enough to ensure
basic servicesBusiness having self-regulation and strong
professional normsKey valuesShort-term wealth creation, self-

9. reliance, dynamic destruction by market; win-lose
philosophyLong-term wealth creation, synergy of sectors and
selective partnerships, pragmatic use/exploitation of
government, do good when it is profitable ; change is both
strategic/rational; game theory Wealth creation never at expense
of some stakeholders; inclusion of stakeholders ; win-win
strategies; concern for the world
When the Ideal Models Become Corrupted: Crony Capitalism
Crony Capitalism
Close relationship between business and government leading to
favored treatment to individuals, firms, or industries at the
expense of the public
Spectrum of Crony Capitalism
1. Strongman model
Dominance of leader and his/her group (i.e., dictatorships or
quasi-dictatorships)
Vague laws; laws instituted abruptly by dominant figure
Example:
Russia under Putin

10. Spectrum of Crony Capitalism
2. Fused political-bureaucratic elite model
Dominance by family or small group of large asset owners
(rather than strongman or despot)
Rampant bribery and corruption
Example:
Second red/official generations in China
Spectrum of Crony Capitalism
3. Economic elite dominance model
Dominance by economic elites because of the power of money;
often more subtle
Market distortion and unhealthy imbalances in civil society
(Source: http://seanmarske.wordpress.com/2012/07/10/whos-
running-the-show-introducing-the-criminal-elite/)
Economic elite dominance model

11. Powerful financial interests can corrupt the society through
Ability to change critical administrative rulemaking
Exerting influence via control of media
Increased opportunity to be elected officials
Buying access based on economic support of candidates
Ability to influence the electorate with threats
To some degree in all developed capitalist countries; Issue:
when does elite dominance become overweening?
Example: US.
Conclusion
The three “pure” types of business-government model ungird
many of our public discussions. However, the elements are
often muddled and so we talk past one another.
Exaggerating for clarity, they emphasize business efficiency,
business pragmatism, and business ethics
Government itself has elements that emphasize these elements
too!
Securities and Exchange Commission
US Trade Representative
US Department of Health and Human Services
Crony capitalism is a distortion of “pure” types
It includes various subtypes:
Strongman
Fused political-bureaucratic elite

12. Economic elite-dominance model
While crony capitalism tendencies can never be fully
eliminated, they can be reduced by wise policies in order to
retain the trust and respect of society for both government and
business in creating a fair society and a healthy market
economy.
Responses:
Katlyn
At Binchley College, a goal set by the Office of Alumni Affairs
is to improve the overall pledge fulfillment rate by 4% for the
current budget year. The people the office will want to focus on
to gather the most valuable data are alumni and present
students. The best way to work towards this goal is to use a
mixture of both qualitative and quantitative research methods.
To improve the pledge rate, the office of alumni affairs needs to
understand its alumni network better and learn why some pledge
and others don’t. The office can employ qualitative research
methods to provide detailed information about the context that
emphasizes on the voice of the participants (Denison &
Secolsky 2018). Binchley College could have one-on-one
interviews with students and alumni to learn the reasoning
behind why he or she would want to pledge to the school. Other
helpful data can be compiled through the alumni networking and
events the office host. For example, Harvard has a strong
alumni network and office of alumni affairs that hosts countless
annual events for all alumni and exclusive clubs for donors (The
President and Fellows of Harvard College, 2018). Organizing
events such as this give researchers access to alumni to make
observations and have interviews to gather data properly. These
qualitative data methods result in the creation of an

13. understanding of why students and alumni want to pledge and
what they think the office could do to improve the pledge rate.
Following the gathering of initial data using qualitative
methods, the office can focus on gathering numerical data to
employ quantitative methods. For the school to improve the
pledge rate, the office needs to understand the type of students
that need to be addressed. Understanding the gender, income
level, age, and other factors will help alumni affairs see what
kind of alumni pledge and what factors impact that. For
example, the school can use surveys and questionnaires send to
alumni to gather the numerical data and create a target type of
students. Through questionnaires, the school can learn what
needs to be done to make that person pledge. Surveys are a
fundamental tool that can be targeted at alumni to lead to a
comparative analysis of the different alumni (Blackstone, 2014).
Factors such as income level and job type could be a reason why
specific alumni do not pledge, so surveying alumni will give the
office a look at the bigger picture. Also, once a particular factor
group of alumni is targeted, the office will have better insight
into how to get them to pledge through one-on-one interviews
previously compiled during alumni events. Binchley College
alumni are one extensive network, but there are dozens of
different types of people within that group will respond to
different tactics the office employs to improve pledge rate.
Learning more about the alumni through interviews and surveys
will the college the necessary data to better address their target
audience and work towards their goal.
Jessica
Due to economic constraints, funding for higher education is a
problem nation-wide. The Office of Alumni Affairs at any

14. college or university has a very important job. They can help to
secure funding for their institution through alumni donations.
Naturally, an important goal for the Office of Alumni Affairs
would be to improve the overall pledge rate from previous years
in order to increase the amount of funds raised. Conducting a
program evaluation within the Office of Alumni Affairs can
provide helpful information and guidance for improving many
functions of the department, including its ability to secure
pledges from alumni.
In order to analyze this goal effectively several pieces of data,
from a mixture of both quantitative and qualitative methods,
would be required. First, statistics regarding the characteristics
of current donors would be important to analyze. Evaluators
should collect data through surveys to discover the ages,
genders, occupations, and locations of current donors. This
data can help evaluators to understand who their donors are.
Are there certain trends that come about from this data? For
example, are the majority of donors recent graduates or older
alumni? Do alumni who work in certain career fields contribute
more than others? Do more females or males tend to make
donations? Do alumni who reside closer to the institution tend
to donate more than those who live further away? Analyzing
this quantitative data can help the Office of Alumni Affairs
realize where they need to focus their attention to have the best
chance or securing pledges.
Qualitative methods in the form of formal interviews, informal
conversations, and/or written artifacts can also be helpful in
gaining deeper insight into who current donors are and why they
choose to donate. After determining the characteristics of
current donors, the Office of Alumni Affairs will want to know
the motivation behind the donations they receive. Through
verbal conversations or written answers to open-response type
questions, the answer to the question "Why?" can be realized.
Why do alumni choose to donate or choose not to donate? Does
it have to do with their current financial situation, their
personal experience at the institution, or the level of outreach

15. from the Office of Alumni Affairs? Do donors prefer to be
contacted via telephone, email, mail, or in person at alumni
events? Through both quantitative and qualitative data
collection, evaluators can collect useful information to help the
Office of Alumni Affairs realize who their target audience
should be and what they can do to improve their chances of
securing donations.
Running head: PLEDGE RATES
1
PLEDGE RATES
3
Pledge rates
Name:
Institution:
Date:
The key goal entails the improvement of overall pledge
rate, and this requires the support of data sources and data to
achieve this milestone. Evidence can be obtained from sources
such as people, document, and observations (Instructional
Assessment Resources, 2011). One of the key data sources is the
faculty members such as staff and department managers who
have a first and view and perspective of the current situation in
the Alumni affairs and overall college. Second, the alumni
members are the next best sources because they have a wide
range of experiences while under the Alumni, such as the
conditions as well as their role in promoting the pledge rates.
Third, students are also significant because they are recipients
of the objectives and outcomes of the office of Alumni Affairs.
Most colleges tend to employ the help of students to further
data on third parties such as the alumni who had pledged to
contribute donations. Fourth, the college’s internal documents
such as articles and the website posts provide relevant data such

16. as posts and events, which helps to follow through on
commitment of pledge fulfillment. For example, the SNHU
alumni have a network of 118,000 alumni which access events,
publications, and stories (Southern New Hampshire University,
2019).
The first type of data that is relevant includes the age
group of the Alumni embers, which helps to identify which
group is either active or inactive in achieving pledge rates. The
second type of data is the personal experiences and thus level of
motivation of the alumni while attending reunions organized by
the college. This data helps to gauge how best to encourage
their attendance over the years and thus promote the
achievement of pledge rates. The third type of data is the type
of programs and the alumni members in such programs. This
data helps to compare the pledge fulfillment rate for each
program and thus identify which program is struggling and thus
find ways to improve.
References
Instructional Assessment resources. (2011). Module
Overview.pg.1-3.
Southern New Hampshire University. (2019). Southern New
Hampshire University. Retrieved from https://alumin.snhu.edu/