Business-Government Relations: Markets, Public Sector & Lobbying (2215.YR.000915.1)

General information

Type:	OPT	Curs:	3,4	Period:	S semester
ECTS Credits:	4 ECTS

Teaching Staff:

Group	Teacher	Department	Language
Year 3	Angel Pascual Ramsay	Dirección General y Estrategia	ENG

Group	Teacher	Department	Language
Year 4	Angel Pascual Ramsay	Dirección General y Estrategia	ENG

COURSE DESCRIPTION

The COVID-19 pandemic has reminded us of the centrality of governments in economic life. The interdependence between public institutions and private enterprises is a central factor in the evolution of modern economies. Markets are defined and structured around a set of rules, norms and regulations. These written laws and regulations issued by political institutions determine what is allowed or not in a given country or market (i.e. who and how is allowed to perform which economic activity under what conditions; who is allowed to establish a company in a given country and the requirements to do so; etc.).

These rules are subject to modulation and interpretation by competence authorities, the legislative, government agencies or the courts. They are also the result of the cumulative interaction of firms, interest groups and political institutions. Thus, competitiveness and profitability must be seen not only as the natural consequence of good or bad firm performance, but also as the outcome of these interactions. These relations also generate a set of political risks, which are increasingly salient and impactful on business corporations. Firms develop their nonmarket strategies to legitimately influence and manage this process.

An understanding of the features of the interactions between private companies and public institutions is therefore a primary element in the education of a modern manager. This phenomenon is further enhanced by globalization, regionalization and digital economy. These trends, indeed, challenge the idea of a single government interface for businesses and require managers to understand governmental decision?making processes at the local, national and supranational level. Therefore, a cross?country and cross?sector mindset is a crucial skill for managers, since they have to adjust their managerial behavior to the unique demands of the institutional setting in which they operate. This course will help you get started in that process.

The overall objectives of the course are:
- To develop an understanding of the influence of business-government relations on the strategies and performance of private enterprises;
- To develop a set of conceptual frameworks to analyze non-market issues.
- To understand the non-market environment of the firm and its relationship to the market environment.
- To consider the political risks associated with these non-market factors, their origin and potential impact
- To understand how non-market strategies are shaped by globalization
- To develop practical managerial skills in order to manage these relations effectively, especially in the international arena

1. COURSE SESSIONS (TO BE CONFIRMED) Session 1. STRATEGY & NONMARKET STRATEGY In this introductory session we will explore why a course on business/government relations is relevant to future business executives. We will do so by focusing on the relevance of the 'non-market environment': what is it? why is it important? why must it be managed? Compulsory readings: - Baron, David (1995). The Nonmarket Strategy System. MIT Sloan Management Review, Fall 1995 - Bach. D. What every CEO needs to know about non-market strategy. Session 2. THE PUBLIC SECTOR Before we explore the nature of the relations between the public and private sector it is essential to understand the functioning and the logic of the public sector, the differences with respect to the private sector and how do governments interact with and affect business. Compulsory readings: - Weber, M. (1921/1968). Economy and Society. (G. Roth, C. Wittich, Eds., G. Roth, & C.Wittich, Trans.) Los Angeles: University of California Press, pp. 956-958. Group 2 will present the following reading: Moore, M. (2003). Privatizing Public Management. SESSION 3: CAPITALISM IN CRISIS? The relation between states and markets is a contested one. For many economic liberals, the less intervention of the state in economic affairs, the better. Yet there is an alternative view, which has gain credence after the financial crisis, which claims that for markets to function properly, strong states and regulation are essential and that, furthermore, state support is essential to foster economic activity. This has led to the development of a variety of capitalist models. In this session we will explore this set of issues and we will pay special attention to the so-called `crisis of capitalism¿ and to which extent the tensions we are observing signal the end of the current mode of economic production and distribution. Compulsory reading: - Manyika, J et al. Rethinking the future of American Capitalism. 12 November 2020. McKinsey Global Institute - Zhai, K et al. How billionaire Jack Ma fell to earth and took Ant's mega IPO with him. Reuters. 05/11/2020. Group 2 presentation: ''When will capitalism end?' - Battistoni, A. When will capitalism end? Boston Review. Session 4. STATES AND MARKETS: INNOVATION AND COMPETITION In this session we will explore the merits and demerits of these competing claims with reference to two particular issues where this relation between the state and markets is particularly relevant in the current business context: innovation and competition. Compulsory readings: - Wolf, M.. A much maligned engine of innovation - Financial Times. US sues Facebook for 'years-long' abuse of monopoly power. Financial Times. December 9, 2020. Group 3 will present the following video: - Mariana Mazzucato: 'The role of state in innovation' Session 5. POLITICAL RISK What is political risk? Why it is important? How to cope with it? Compulsory reading: - Paulson, H. 2018. We are living in an age of unprecedented risk. Financial Times - Sottilota, C. 2013. Political Risk: Concepts, Definitions, Challenges. Group 4 will present the following reading: Eurasia Group. 2021. Top Risks 2021. Session 6. POLITICAL RISK: GEOPOLITICS AND GEOECONOMICS The geopolitical stability of the last part of the 20th century is gone. We are immersed in an era of changing geopolitical tectonic plaques, which is giving rise to new risks that will affect businesses and which the Covid-19 pandemic has exacerbated. To this one must add global security risks, which now as always can have a significant impact on business and society. The session will cover traditional sources of security risk to business, such as terrorism, wars or revolutions, as well as more novel ones such as cybersecurity. It will also look at how the new global governance order, or the lack of one, has significant impact on the context within which business operates. Reading: - Bremmer, I and Roubini, N. 2011. A G-0 world. Foreign Affairs, March/April 2011 issue. - Gyula Csurgai (2018) The Increasing Importance of Geoeconomics in Power Rivalries in the Twenty-First Century, Geopolitics, 23:1, 38-46, DOI: 10.1080/14650045.2017.1359547 Group 5 will present the following reading: - Leonard, M. 2017. Connectivity Wars. (Read only the Introduction.) Session 7. POLITICAL RISK: SOCIAL RISKS Political risks often have their origin in social phenomena. Issues such as the changing demographics, increasing inequality and associated pervasive discontent, and the political instability these breed, including its manifestation as populist political ideologies and parties, are all potential sources of risks for business organisations and society in general. Reading: - Milanovic, B. Inequality and Democracy - Muller, J. What is populism? Group 6 will present the following readings: The impact of rising inequality - Wolf, Martin. Why inequality is such a drag on economies. Financial Times. - Giles, Chris. Inequality is unjust, not bad for growth. Financial Times Session 8. IMPACT OF POLITICAL RISK: EXPROPRIATION AND SOVEREIGN DEFAULT This session will bring down to the practical level the analysis of the political risks identified in the previous sessions. It will do so by exploring some of the most common mechanisms by which political risks can affect business, focusing on issues such as expropriations and sovereign defaults. Readings: - MIGA. 2012. World Investment and Political Risk (READ ONLY Chapter 2. Sovereign default and Expropriation) Group 7 should present the following reading: - MIGA. 2013. World Investment and Political Risk (Chapter 3. Breach of Contract)) Session 9. MANAGING BUSINESS GOVERNMENT RELATIONS (I) This will be the first of two sessions introducing key tools that can help us manage business government relations. In this class we will focus on tools to manage political risk and thus apply the lessons learned through the course. Class discussion. All participants should read the following reading: - MIGA. 2013. World Investment and Political Risk Report (Chapter 2. The Political Risk Insurance Industry) Group 8 will present the following reading: - Harford, T. 2014. How to see into the future: the new face of forecasting. Financial Times Session 10. MANAGING BUSINESS GOVERNMENT RELATIONS (II) Focus: In this concluding session we will explore how to manage business government relations. Class discussion. All participants should read the following readings: - Baron, D.P. (2003). Implementing political strategies. Business and its Environment. - Case Study "Pharmaceutical Switching" Group 9 will present the following readings: Jonhson, S. (2009). The Quiet Coup. The Atlantic Online.

Methodology
The methodology used is designed to encourage active student participation and consists of a combination of lectures, analysis and discussion of case studies, self directed learning based on recommended readings, teamwork, as well as learning from experiences shared by invited guest lecturers.

In-class readings/cases instructions
All students are required to read in advance and be prepared for discuss the readings assigned to the sessions. Participants are also required to read the when scheduled as they will also be discussed in class. Readings and cases will be available in the course Moodle.

Group work instructions
Groups will present the selected readings assigned to each theme. Each of the groups will be in charge of presenting a reading. The expected output of the presentations is a brief summary of the readings. Presentations may use PowerPoint support, and each shall last 10 to 15 minutes approx. Students are highly encouraged to prepare/read the selected readings individually and to use them as basis for discussion during the sessions. It is also highly recommended to use the readings' key concepts and main take-aways when preparing the exam and the final case report.

Selected readings will be provided in Moodle. See also section on 'Course Sessions'

Group	Teacher	Department
Year 3	Angel Pascual Ramsay	Dirección General y Estrategia

Group	Teacher	Department
Year 4	Angel Pascual Ramsay	Dirección General y Estrategia