Student guide Faculty of Economics A.Y. 2008/09

Beyond the market environment, around a firm there exists its non-market environment: regulation, politics, activists, and so on. Managers without an adequate understanding of these subjects can prepare an unbalanced business strategy, with potentially harsh consequences for the operation of their enterprises.

 

This course is an introduction to the non-market business environment. It starts by giving students the tools from political science which are necessary for building non-market strategies. It then proceeds by defining the non-market environment of business and describing what an integrated business strategy is. Third, it presents the non-market strategies of business in public politics sphere, with applications to regulation and environmental protection. Next, it discusses “private politics”: the operation of firms and of an industry under the pressure by activists. The course concludes by studying recent findings in the positive analysis of corporate social responsibility.

1.     Tools from political science (16 hours):

a.     Collective action, prisoner’s dilemma, and free-rider problem

b.     Majority-rule institutions and the median voter theorem

c.     Legislative bargaining

d.     Lobbying

e.     Campaign contributions

f.       Bureaucracy

2.     Non-market environment of business and integrated strategy (6 hours)

3.     Business and public politics (18 hours)

a.     Majority-building strategies

b.     Electoral strategies

c.     Regulation

d.     Environmental protection

4.     Business and private politics (4 hours)

5.     Corporate social responsibility (4 hours)

The evaluation consists of two mid-terms and a final exam. Each mid-term accounts for 30% of the final grade, while the final exam accounts for 40% of the final grade. Mid-terms and the final exam consist of multiple-choice and open questions.

The main texts for the course are Kenneth Shepsle and Mark Boncheck, Analyzing Politics: Rationality, Behavior, and Institutions, WW Norton, 1997 and David Baron, Business and Its Environment, 5^th ed. Prentice Hall, 2006. The chapters from these texts will be supplemented with journal articles.