Matteo Gatti, "Corporate Power and the Politics of Change" (Cambridge UP, 2025)

Summary

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Podcast Summary:

New Books Network
Episode: Matteo Gatti, "Corporate Power and the Politics of Change"
Host: Alfred Marcus
Guest: Matteo Gatti
Release Date: July 22, 2026

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Episode Overview

This episode features a deep conversation between host Alfred Marcus and Matteo Gatti about Gatti’s new book, Corporate Power and the Politics of Change (Cambridge UP, 2025). The book explores the evolution of corporate power beyond traditional economic roles into significant political and social actors. It investigates how—and why—corporations increasingly act as “governing” agents, filling gaps left by governments, responding to and shaping social change, and introducing new risks and questions for democratic legitimacy.

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Key Themes & Discussion Points

1. Defining “Corporate Governing”

(01:32–03:42)

• Corporate governing involves corporations using their power to drive socioeconomic change, not just through lobbying or CSR, but by (a) “socioeconomic advocacy” (publicly taking stands on issues) and (b) “government substitution” (filling functional gaps left by government failures).
• Differs from:
  • Corporate Political Activity: Historically “rent-seeking” and behind closed doors (e.g., lobbying).
  • CSR: About limiting harm. Governing seeks proactive change.
  • Stakeholder Capitalism: Looks inward to the firm’s own stakeholders; “governing” looks outward to society.

“Rather than litigate definitional borders, I found it more useful to offer sort of a brand new taxonomy for a phenomenon that peaked in the 2010s and early 2020s, though... its roots run back through the progressive and civil rights eras.”
—Gatti (03:32)

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2. Why Have Corporations Gained Political Power?

(03:42–05:54)

• Multiple drivers:
  • Internal:
    • Inspirational younger workforce (Millennials/Gen Z)
    • ESG-focused investors
    • Shifts in corporate purpose (e.g., 2019 Business Roundtable)
  • External:
    • Societal reckonings: #MeToo, Black Lives Matter, climate movements
    • Social media amplifies activism
    • Severe government dysfunction, especially in the US
• Result: Corporations “pulled into the vacuum” created by policy paralysis—sometimes willingly, sometimes pushed by stakeholders.

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3. Who Drives Corporate Action—Leadership or Employees?

(05:54–08:56)

• Top-Down Example:
  • Nike & Kaepernick: Strategic, CEO-driven, “designed to create some uproar” (06:47)
• Stakeholder-Driven Example:
  • Disney vs. DeSantis: Driven by outrage among employees/writers and activist consumers; forced Disney’s hand.
• Gatti highlights that sometimes corporate positions are strategic, other times reactive, driven by pressure from workers or public constituencies.

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4. Risks and Reversals: The Challenge of “Woke Capital”

(08:56–12:04)

• Corporate advocacy can lead to backlash from both left and right.
• Notable cases:
  • Nike’s Kaepernick campaign: Short-term gains; long-term damage debated.
  • Target: Attempted to retract DEI commitments and faced backlash from both sides.
  • Bud Light, Gillette: “Name and shame” industry arises, fueling outrage campaigns.
• Polarization raises the stakes: “How you navigate politically... is one of the things that strategically you have to be extremely cautious.” (11:55)
• Gatti: “Executives are paid very well... can afford getting people on board who know how to navigate that.” (12:01)

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5. BlackRock, ESG, and Principle vs. Strategy

(12:04–13:58)

• BlackRock as emblematic: Profited from ESG until it became politically costly; then rebranded/withdrew.
• Host: “He wasn't really that serious.”
  Gatti: “BlackRock is a typical example of this lack of principles... They were selling the ESG products left and right. And then... decided to change it and say, well, listen, this is too politicized.” (12:23–12:40)

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6. Brand Identity: To Stand Out or Stay Neutral?

(13:58–17:12)

• Political segmentation: Some brands (Patagonia) double down on activism. Others (Pepsi) misfire with performative gestures.
• Key insight: Stakeholders are “pretty good at telling sincere from performative,” rewarding authenticity and punishing opportunists. (15:22)
• Building a credible values-driven identity means “it’s hard to improvise authenticity” and “one bad meal” (16:35) can taint the brand.

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7. Exemplars and Detractors of Corporate Advocacy

(17:12–20:56)

• Positive examples:
  • Costco, Apple, Goldman Sachs, JP Morgan: Stuck to DEI/values, at least initially.
• Notable reversals:
  • Big Tech (Meta, et al.): Swift, visible retreat from past advocacy (e.g., winding down DEI after regulatory pressure).
• Sometimes, corporate advocacy spurs real legal change (e.g., end of mandatory arbitration for sexual harassment claims).

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8. The Politics-Corporate Power Dynamic: Who’s Leading?

(20:56–33:39)

• Under Biden, “retreat” from activism is attributed to legal/political pressures—corporations are “precarious allies,” not consistent agents of change.
• Notable analogy: A shift toward a “continental de régisme,” with open political retention and enforcement.
• “Today, [power] comes mostly from political actors...” (23:10)
• Gatti: Corporate power operates like an accordion: sometimes strong, “sometimes it dilutes...” (27:54)
• Current pattern: Markets and civil society once disciplined firms; now, administration dictates their public stances.
• Corporate power is neither stable nor uniformly growing—responsive to context.

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9. Limitations and Influence: Corporate Power ≠ All-Powerful

(33:39–36:01)

• Important distinction: Billionaires wield more influence in politics than corporations per se.
• Corporations are subject to stakeholders, regulation, investors—not omnipotent “masterminds”.

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10. Best Practices for Corporate Political Engagement

(36:01–41:01)

• Gatti’s recommendations for firms:
  • Embrace transparency and clear internal process.
  • Enhanced disclosure of corporate advocacy—what, when, why actions are taken—builds trust.
  • “Better disclosure... would serve firms own interest too, because it's how you build trust in the long run and how you defend your position.” (39:58)
• Legal context: “Business judgment rule” shields directors if decisions are rational and informed.

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11. Corporate Governance ≠ Democratic Governance

(41:01–46:25)

• Corporations have historically served public functions (e.g., colonial corporations, Progressive-era welfare).
• But: “It’s very disingenuous...to even define what’s private and what’s public because... there are lots of blurred lines there.” (42:13)
• Risks:
  • Corporations are unaccountable—shareholders/citizens can't easily check them.
  • Possible “death of politics” if citizens push for corporate fixes over democratic solutions.
  • “Push corporations and use them, but be careful and never delegate to them.” (46:16)

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12. Constitution & Law: Regulating Corporate Political Power

(46:25–48:55)

• States (e.g., Montana, Hawaii) experiment with limiting corporate political rights via incorporation laws.
• It's an open constitutional question whether these efforts will survive legal challenge.

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13. What’s Next? Gatti’s New Work and Influences

(49:15–52:53)

• Gatti hosts a podcast, also called Corporate Power and the Politics of Change (ECGI).
• Recent research on “ideological shareholder litigation”—plaintiffs suing companies for being either “too woke” or “not woke enough”, shaping board agendas.
• Influenced by leading scholars (Jill Fish, Steve Bainbridge, Katarina Pistor, Ann Lipton, Elizabeth Pollman, etc.).
  “Some of the best of the best are there.” (52:36)

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14. Looking Ahead: The Unstable Equilibrium

(53:45–55:23)

• Gatti: Current pattern is “unstable,” likely to shift with new political coalitions/elections, but hard to predict direction.
• “A reversal of a reversal would just look very dumb.” (54:06)
• Some firms quietly continue old DEI practices under different labels; others stick with legitimate advocacy.
• Anticipates “lots of acrobatics” and public shaming as political winds change.

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15. Final Reflections

(55:23–end)

• Marcus: “Corporations are no longer simply participants in markets, if they ever were... helping to shape the rules, norms, and public policies that govern those markets.”
• Expanded corporate role brings both opportunity and risk; legitimacy depends on how well companies can adapt, disclose, and maintain stakeholder trust.

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Memorable Quotes & Timestamps

• On Corporate Governing:
  “The exercise of corporate power to drive socioeconomic change... corporate advocacy is the talk, but government substitution is the action.” —Matteo Gatti (01:58)
• On Stakeholder Pressure:
  “Companies get pulled into the vacuum. Sometimes they do it willingly, sometimes because their stakeholders sort of drive them there.” —Gatti (05:45)
• On Risks of Political Advocacy:
  “It’s one of the macro areas of enterprise risk, like cyber or AI... how you navigate politically, I argue in the book, is one of the things you have to be extremely cautious about.” —Gatti (11:55)
• On Authenticity:
  “Corporate governing runs on authenticity. It’s hard to improvise authenticity... a restaurant cannot offer one bad meal and [expect to keep] the clientele.” —Gatti (16:35)
• On Political Power:
  “Corporate America is... a precarious ally... these activities also [are] very flaky and opportunistic.” —Gatti (23:10)
• On Democratic Legitimacy:
  “If citizens conclude that pressuring, let’s say, Apple works better than voting, we’re in trouble.” —Gatti (45:53)
• On Transparency:
  “Better disclosure... would serve firms own interest too, because it’s how you build trust in the long run and how you defend your position when the heat arrives.” —Gatti (39:58)

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Notable Case Studies Mentioned

• Nike & Kaepernick (06:37)
• Disney vs. DeSantis (“Don’t Say Gay”) (06:54)
• Target DEI reversal (10:37)
• BlackRock’s ESG pivot (12:04–12:40)
• Tech sector’s DEI U-turn (18:29–21:49)
• Big Tech and sexual harassment arbitration (18:29, 19:55)
• Bud Light, Gillette, Pepsi social campaigns

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Critical Takeaways

• Corporations are increasingly political actors, but their influence is contingent, reactive, and often opportunistic.
• Stakeholders (consumers, employees) are adept at detecting sincerity and rewarding or punishing accordingly.
• Navigating today’s environment demands authenticity, transparency, and careful alignment with stakeholder values.
• The corporate role in governance fills real gaps but brings risks for democracy and accountability—active citizen vigilance is required.
• The future is fluid; the corporate “muscle” for advocacy is a strategic capability, but not a stable or omnipotent one.

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For a detailed exploration of these themes, listen to the complete episode or explore Matteo Gatti's book and podcast.

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Transcript

[A]

Welcome to the New Books Network.

[B]

Welcome to the New Books Network. I'm Alfred Marcus and this book is part of my series on the cuffs between strategy and ethics. Before we begin, a brief personal note. I've recently published Comeback, which examines how organizations recover from crisis by rebuilding legitimacy, restoring stakeholder trust and refining their strategies. One of the themes that emerged repeatedly in that work is that companies today are expect expected to do much more than produce goods and services. Increasingly, they are expected to take positions on social and political issues and sometimes even fill gaps left by governments. Today's book explores exactly that transformation. Our topic is Corporate Power and the Politics of Change by Matteo Gotti. The book argues the corporations are becoming important governing institutions in society, not simply responding to public policy, but increasingly helping shape it through both advocacy and direct action. It introduces the concept of corporate governing and asks whether this growing political role is strategically effective, ethically legitimate and ultimately compatible with democratic governance. Matteo, welcome to the podcast.

[A]

Thank you so much Alfie. It's great to be here.

[B]

Let's begin with the central idea of the book. You introduced the concept of corporate governing to describe corporations acting not merely as economic organizations, but increasingly as political actors. What distinguishes corporate governing from more traditional ideas like corporate political, corporate social responsibility, stakeholder capitalism, or corporate political activity?

[A]

It's a great question. So each of those captures a piece of it, but none the whole I would say. So the way I define corporate governing is the exercise of corporate power to drive socioeconomic change. And the way I describe it comes in two ways. One, I call it corporate socioeconomic advocacy, which is sort of the talk, the corporate talk, companies taking public stands on immigration, voting rights, climate change. And the other is government substitution, which is the action part. Companies stepping in where government fails, like covering abortion, travel after Dobbs, or retailer increasing the minimum age for buying guns. So as for the concept you mentioned, I think that traditional corporate political activity is mostly rent protection behind closed doors, if you think about lobbying and political contributions. Whereas what I analyze advocacy is overt, right? And sometimes it actually polarizes by design. Stakeholder capitalism is about how the firm treats its own constituencies for the most part, whereas corporate governing, as I see it, aims past the firm sort of as society as a whole. And csr, corporate social responsibility is mostly about limiting harm, whereas corporate governing tries to bring change about. So rather than litigate definitional borders, I found it more useful to offer sort of a brand new taxonomy for a phenomenon that peaked in the 2010s and the early 2020s, though as analysed in the book, its roots run back through the progressive and civil rights eras.

[B]

You argue that corporations have increasingly stepped into roles once occupied primarily by governments. And there is this whole period of time and it's just increased over time. Is that so much of government activity is contracted out essentially. I guess that's part of this. I mean prisons and someday the post office will be contracted out. And why has this happened? Is it merely a consequence of political polarization and government dysfunction or political ideology? Changes in markets, technology, stakeholder expectations. How have they fundamentally altered what society expects from large corporations?

[A]

Okay, so I think that all of the things you mentioned, they all contributed and in a way sort of try to stay away from trying to find one cause and try to find causation because we know that in social sciences is so difficult anyways, it would be a fool's errand. So what the book does is sort of talk about the drivers that got us here and sort of like divide them into to families. Some come from inside the firm itself. Younger workforce of millennials and Gen Z ESG minded investors pushing change from a blow and sort of like a rethinking of corporate purpose coming from the top. You know, think about the business roundtable in 2019. But then there are major drivers from society at large. Think about the social reckonings of the 2010with MeToo, Black Lives Matter, the climate marches, all of this amplified of course by social media. And all the while the political system in the US that is very polarized, very graveloft and finds it very hard to deliver. So the last one, political dysfunction is probably the deepest driver. And so when institutions can move, I think corporations get pulled into the vacuum. Right. Sometimes they do it willingly and sometimes because their stakeholders sort of drive them there.

[B]

Can you talk about the role of employees? There's some famous cases that took place with Alphabet about the employees resistance to some of their activities. And then we also have some high minded corporate CEOs. Which of those forces do you find more significant over time and do they interact? Are there companies that have alignment between them and would that be. Can you think of examples? And that would be very significant in terms of this transformation.

[A]

So let's take two examples and the book starts with them. One is the famous Colleen Kaepernick campaign by Nike. And that was really driven by, you know, the, the, the top right by. It was like a strategic move that paid off well, it was risky, but paid off well. They knew their consumer base and figured out a campaign that was designed to create some uproar. They knew that somebody would not be happy with it, and yet they, they, they decided to go for it. Contrast that with the fight, the very public fight between Disney and Ron DeSantis in Florida. That was a PR nightmare that Disney had to navigate. Why? Because when the Florida legislator proposed don't say gay. The Orlando Sentinel, the local newspaper, found out that the bill proponent was a recipient of political contributions by Disney. So hashtag Boycott Disney started to go viral. And the company was. Had to take some position at that point. Right. And they were, you know, arguably between a rock and a hard place. And they did all the things that you're supposed to do to follow good process in corporate governance. And they had several meetings at the executive level, but also at the board level, and they decided to publicly criticize the bill. And that, of course, was what Ron DeSantis wanted. It angered him and sort of the whole thing escalated. And at the end, now we're dealing without knowing the counterfactual of what would have happened if Disney didn't operate. So this to say that there can be very different drivers. Sometimes they are pure strategic decisions that the corporation makes, and some other times you sort of drag into it by your own stakeholders. In this case, it was a mix between employees at Disney or quasi employees, the writers, the screenwriters, the showrunners, who are not technically employees, but they're very crucial parts of the business enterprise.

[B]

Yeah, but there are dangers to doing this, of course, too. As you talk about between the rock and the hard place, I think about Target and its vacillations. And is the harm irreparable? Or even in the case of Nike. Nike, I think got benefits in the short run, but in the long run, it may have actually damaged the brand in some ways. Are these things quickly forgotten? I guess that's my question.

[A]

By the way, it depends. I think some studies show that, yes, after a little while, employees forget. And of course, studies, you know, there are several studies there and some studies are firm specific. So they analyze only one company. I think it's one study. They were analyzing Apple and sort of footwork food traffic after Tim Cook bought a. Personally bought a page to criticize an Indiana bathroom bill. And it turned out that, yes, as you can see, you look at different counties. There are some red counties and blue counties. And so the food work in red counties dropped but then recovered ultimately. But in the blue counties didn't go down and in fact increased. And so in the end it was a net gain. Now, of course, we gotta be a little careful when we analyze These studies because they were done at a time where there wasn't this whole cottage industry of people who actually name and shames corporations for being too woke, as they say. Right now we have actual people who made their own careers by creating TikTok and YouTube videos, say oh, look at John de. Look at what they're doing here, look at that other corporation and sort of try to create lots of outrage from consumers. There are some super famous cases like Bud Light and Gillette for instance. Right. And also you mentioned Target and Target got was, no pun intended, the target of two types of backlash, some from the right and some from the left because they decided to wind down all their DI commitments. They had, you know, internal policies to buy from black and brown entrepreneurs which they dismantled. And you know, eventually they got caught by a big backlash and you know, consumers started to boycott, boycott the brand. So it's very hard to navigate and you know, this day and age is one of the macro areas of enterprise risk like cyber or AI transition. I mean how you navigate politically argue in the book is one of the things that strategically you have to be extremely cautious. But at the same time, as I mentioned in the book, executives are paid very well and corporations make a lot of money and can afford getting people on board who know how to navigate that.

[B]

What do you think of BlackRock? We're going to talk about this later about the movement away from ESG commitments. But what about BlackRock and Fink? It seems like he was really at the forefront but as soon as he got some criticism he just backed off. He wasn't really that serious.

[A]

Well, yes, so BlackRock is a typical example of this lack of principles.

[B]

Lack of real principles. Yeah.

[A]

And all of a sudden they were selling the ESG products left and right. And then all of a sud when the term became a divisive lightning rod, decided to change it and say, well listen, this is too politicized, we're going to use different terms and then you know, get quieter and quieter and quieter because of course they, they were risking, with the new administration, they were risking a lot. Right. So blackrock in certain spheres is considered sort of like a cabal, right. Some sort of, of a bad organization that sort of drives all decision making at all corporations. Of course this is not entirely true. Of course BlackRock is influential and it was influential in engaging with its various portfolio companies. But in the end it was just a type of bottom up pressure that they were trying to sort of interpret the sentiment of its own investors. Right. Of its own investors who were Treating at the very least the climate risk as something systemic and important, something that you need to tackle to address. If you're a corporation getting into the 2000s and beyond, do you think.

[B]

I don't know if this is entirely true, but I would suspect that Walmart has more of a right leaning customer base and Amazon has more of a liberal leaning customer base. And I've heard that in the past Pepsi, it had more urban appeal and more of a liberal appeal compared to Coke and so on. Do you think corporations should enhance those identities? And it's useful to have a clear identity or that they, it's best to be murky and in the middle. What are even the tendencies? I mean not even just what should they be doing, but what do you see the tendencies in that regard? I guess there are some extremes, but.

[A]

Right, right. I think it varies. The mix varies firm by firm. Right. So as you mentioned just now, there are some extremes. Think about, you know, they're not extremist corporations, but there are some corporations that do make their sort of political involvement as a staple. Think about Patagonia for instance. Right, right, right.

[B]

Mentioned all the time corporate virtue.

[A]

And then, but then you mentioned Pepsi and Pepsi is the, the opposite example. Right. They tried to ride the wave of this and they.

[B]

Urban corners.

[A]

Right. And so they, they, they ran that, that commercial, that Pepsi commercial that was meant to sort of address systemic racism and that backfired. They had to retire it the next day because there was so much uproar. So what's the takeaway here? Nabuka stressed that these variants across firms is important and that stakeholders, especially consumers, but not just consumers also workers are pretty good at telling sincere from performative and the empirical work supports this. Consumers reward companies that they perceive as generally values driven and punish the opportunists. So the key executive skill here is having a real pulse on your stakeholder base. And again, and this is the difficult part because you know, it's not always easy if, you know, if these corporate governing runs on authenticity, it's hard to improvise authenticity. Right. It's some.

[B]

Exactly.

[A]

It's sort of like a quality that you have to build time and again. And you know, as they say, you know, just like a restaurant cannot offer one bed meal and all the, you know, all the clientele is gone. Even here a corporation wants to do a reversal, then people are always going to look you that way. So you have to be extremely careful stepping in and also stepping out and reversing. But what we see from the data is that some actors are better than others at doing this.

[B]

Who are they? Give me some examples of companies that you think have done it.

[A]

Well, I mean, I would say that Costco has resisted from the anti EDI movement pushes. Some other large Wall street firms stayed away from an immediate reversal. I think that both Jamie Dimon and Goldman Sachs, Jamie Dimon and JP Morgan and also Goldman Sachs stayed at said immediately after the executive orders trying to make it legal to have DEI processes at firms. They said that their programs were all legally tested and they were compliant with the law. So bring it in if you want to sue me. We're going to defend. And then of course, then they had to change because they had to be malleable with this administration that punishes those who oppose to them and rewards loyalties. So everything is openly transactional. There's retaliatory enforcement that is overt, is not even said quietly anymore. But, you know, some stood the course. We were mentioning Patagonia before Apple too, in some ways try to maintain at least the earlier commitments, especially on dei. But at the same time they made gifts to the president and Tin Coke was seen as the premiere of the movie Melania. So know, it's very hard also to maintain, you know, a perfect, a perfectly coherent profile, if you will. But there are some that at the very least have tried that, right? Versus there are others that did, you know, big reversals, you know, big tech as a whole, as a whole industry. And especially Meta, you know, think about, you know, Mark Zuckerberg, you know, in the 2010s, Facebook, now meta was at the forefront of all of this. Its employees did walkouts. Its employees really campaign against mandatory arbitration for sexual harassment claims. In the aftermath of the MeToo campaign and bunch of firms of Silicon Valley firms and other tech firms, including Microsoft, they repealed those policies that had mandatory arbitration for sexual harassment claims. And that created momentum that translated into political action. There was one of the rare bipartisan bills that were approved by the past Congress and Joe Biden signing into a law. So, you know, when we look at this overall phenomenon and we try to maintain a sort of like an optimist view of it, sometimes it does help foster political change as well and legal change as well. It doesn't always happen that way. And you know, then you have the Mark Zuckerbergs again that instead of keeping with that sort of action and talk that they were entertaining at the time, you know, he shows up wearing a gold chain and praising masculine energy and aggression and saying that it would wind down all the DEI programs because they were unnecessary. So yeah, I'm happy to talk about all these reversals that happen in the industry and what they tell us about corporate America more generally and this overall phenomenon more generally.

[B]

Why don't you go on? I mean, there just seems to be especially like tech firms an enormous capitulation compared to what I would have viewed them, let's say a decade or so ago. They seem to be completely different today. They came to.

[A]

Yes, I mean, if you think about it, you know, I'm a lawyer, so know this quite well. You know, the government, Right. Tries to regulate you. Right. For a whole variety of reasons. So corporate America is in the business of litigating against the government, arguing that, you know, these regulation or that regulations are unlawful and you know, and you get sued by the government and you try to fight back all the time. This didn't happen with dei. The speed of reversals was shocking and to some extent was not really good process.

[B]

Right.

[A]

And in fact, you know, the likes of Target got caught because the reversal was so blatantly fast that their consumers really rebelled. And we talked about that. But you know, the cynical me would suggest that lots of tech firms had really crucial litigation ongoing on other fronts with the government. Think about Meta and all the antitrust litigation, right?

[B]

So

[A]

a cheap and fast way to make friends with this administration was to support or not oppose the anti DEI turn. And that what we've seen. So what's the takeaway here? I think that this tells us a lot about corporate America and it tells us that it is a precarious ally, so to speak. Right. It can be helpful sometimes. We just mentioned how mandatory arbitration for sexual harassment claims were invalidated under federal law by Congress. But as I said in the book, these activities also very flaky and opportunistic. Right? And think about it, it will never show up on truly distributional matters. Think about labor matters, antitrust, consumer protection, privacy, taxes. You know, corporate America is not your friend, it's not a citizen's friend in any of these. So the retreat, the speed of the retreat also tells us where the pressure comes from. Now we could say that for a decade before most of the discipline was coming from markets, from consumers, employees and investors. But today it comes mostly from political actors from the administration dictating what private enterprises may and may not support. And in the book conclusion, I call this a sort of like a form of, of economic de regisme that is sort of closer to post war continental Europe than to the American tradition.

[B]

Right, right, right. That's a good analogy. Yeah.

[A]

And so, yeah, so, and, and interestingly, the. Some of the voices that attacked this whole phenomenon as sort of undemocratic are now wielding state power to police the very corporate speech. So which is, you know, an ironic turn of events.

[B]

I mean, we think corporations are very powerful, but they're very easily intimidated and can be forced into line. There may be some type of moral principle, but in the end, it's a strategic calculation. And it involves a whole host of factors like customers, employees, investors, reputation and competitive positioning. Is this a strategic capability, then kind of a muscle that some corporations are better at than others, or is it protective or is there actually gain? Are they protecting their assets? Is this a way for them actually to gain advantage strategically and economically?

[A]

Yeah, that's a good question. And I'm going to give you a super quick answer, but I want to go back to some of the things you were saying before. They're very interesting. So the quick answer I'm going to elaborate a little more is that again, there's lots of variance. Right. Firms are not. Corporate America is not just one monolithic piece.

[B]

I think that's very important to be aware of.

[A]

And so different products, different sectors, different industries, different consumer bases. And so that changes a lot. And each with their own tradition and history. And so. And some of them are really, truly protecting some corporate assets. Because if you think about it, some of the big pushes that corporations were responding to were coming from employees in very competitive labor markets.

[B]

Tech.

[A]

Right. The tech industry had engineers who knew that it could walk out the door and get another job at. Back then it was probably, I don't know, Apple or others now, of course, are the biggest, the frontier AI firms. Right. And so there's that. And so this takes me back to your political power starting point, which is so interesting because, you know, I can sort of tell you the story here. If you think about. Firms were vocal against the first Trump administration. This is where I surveyed most. Most of them taking public stands. And they've been, you know, predominantly silent in the second. And why is that? Well, the first presidency arrived having lost the popular vote. It looked disorganized, opened with unpopular moves. Think about the Muslim ban, think about the Paris Agreement exit. And stumbled badly. And in some events, like Charlottesville and the Unite the Right rally, and so opposing it was sort of cheap and in some ways almost even profitable. The second administration came in aggressive and organized and also riding the wave of the Supreme Court's affirmative action ruling. And so corporate America read the room and Correctly they knew that the private sector was the next in line. Right.

[B]

So

[A]

political power is this sort of accordion in some way. Right. Sometimes it's very strong and then at some point it dilutes and corporations know when to engage with it and when to not engage with it. And we're seeing this, this and you know, in some ways, some of my colleagues are looking at all this recalibration that has happened after the second Trump administration. In a way, it's a sort of a market adjustment. Right. You know, the equilibrium has, is, is, is, is moving but not sure how permanent is going to be because again, you know, the, the, the midterms are around the corner. You know, the, the, the presidential elections are in two years and change. And so, you know there's going to be new, a different coalition probably and, and, and, and different political power being used. So we're gonna have to observe and, and firms are, I'm sure they're going to adapt to it and they're gonna fine tune with the new reality.

[B]

They will, there will be some lasting changes as a result of this period, but they won't stick with it. They'll blow with the wind. They're easily influenced. This is a portrayal of corporate power as being less strong than some people might have, conspiratorial people. The governance that we have right now is not really a result of really what corporations necessarily would favor. This isn't something that's they've imposed upon us as citizens. It's sort of almost the opposite. The politics is ascendant and corporations are following at this moment in American history. Do you think that's true or.

[A]

I agree with you. I think that we have to distinguish between corporations and politics and money. In politics, the latter is way more important and the latter is largely driven by billionaires or now trillionaires or trillionaire. But it's different corporations, Corporations are these animals that are under the radar. They have several, several actors that constrain their actions. Right. You know, you don't have a CEO who's you know, really free to imperially dictate. I mean some do that because you know, there, there are some imperial CEOs of course, especially in big tech, but those are rare.

[B]

Right.

[A]

You know, the, the, the, the, the, the, the typical CEO of corporations that have a significant investor base where, you know, the capital markets are relevant. Well, those are subject to a whole, you know, some, my colleagues call it the corporate governance machine. That is not just shareholders, there's also other stakeholders, but there's, you know, Index fund index funds or, you know, the S&P 500 index itself, you have a whole host of different actors there that in many ways, and of course, laws, statutes, decision, you know, judicial decisions. So there's a garden variety of constraints that as a corporation you have to be wary of. And including political power, including at a time where you have an administration who's definitely not shy about using it overtly and exerting political power to carry favor. So we, the corporations themselves are not really these masterminds that are really driving politicians that much. I think that, you know, wealthy people and you know, the campaign laws that are very, very, you know, they don't really oppose big limitations on, on contributions. Those are important factors. But corporations themselves, I think, I don't know if I have to look at what's going to happen five to ten years from now in these, in this sphere, I sort of expect a pendulum.

[B]

Right.

[A]

I can't tell you really whether it's going to swim back as far as it stood five or 10 years ago. But I don't think that the current momentum looks like a stable equilibrium. Because if you think about it, none of the structural drivers that was mentioned in the beginning of our conversation has gone away. Think about the workforce demographics, investor expectations, social media, and above all, the political system keeps failing to deliver. So as long as a vacuum exists, someone gets pulled into it. And also there's probably like a twist that we may consider. Assume Democrats retake control of government and assume that they also somewhat keep moving left, which they have over the last few years. Well, then we may see corporations advocating again, loudly, but on economic issues becoming Milton Friedman's again. Right. Amplifying pro market views in a way, corporate governing, as I call it, has no real fixed ideological valence. Right. The gene is out of the bottle, but it has no permanent master, so to speak.

[B]

Yeah. I mean, they could conceivably also accommodate a democratic, socialist, Democratic party and flip in that direction. I was thinking about, I love your distinction between billionaires exerting their influence through campaign contributions versus corporations. That's, I think, a very useful distinction. But is there a corporation in the Trump era that has really been harmed in a great deal by. Can we think of somebody? Because are these threats real? Are they imagined?

[A]

Well, depends how you look at it. Right. Depends how you look at an organization from a shareholder value perspective, it is hard to tell, especially because, you know, we're at war with Iran. And so of course macro dynamics are probably more relevant to the stock price than, than before. But you know, if I have to look at organizations, right, and think about Paramount and CV and CBS. Right. And think about what happened to 60 Minutes, you know, you could make the argument that if it's not just the shareholder value that we ought to look at, but their. There's more than one could argue that, yes, some have been impacted massively. I mean, the entire media landscape is changing, especially with the merger between Warner Discovery and Paramount. So they've been quite impactful, for sure.

[B]

So we talked a little bit about the future and what's going to come next. If you were, let's say, running a company or you had some, how would you, how would you organize it within the firm to run this area of this statecraft, you know, I guess you could call it that, yeah.

[A]

So in the, in the book, in the end, I sort of try to map out ways for corporations to sort of of play this game in a way that helps them keep their competitive edge on the market, but also, you know, fend off democratic legitimacy criticism. Right. And so I don't, arguably don't have final answers there because they would be pointless. Sort of offer a modular recipe, if you will. But. But the main ingredient there is probably working with transparency. So improve how you communicate about these things with your stakeholders. And just want to say why. I land mostly on transparency and disclosure. There's been a lot of criticism against corporations taking public stance, corporations speaking up, fights with politicians. And this is, you know, for us lawyers, this is a tricky space because, you know, Citizens United really shields the advocacy side and basic corporate law. I don't want to bore your listeners too much, but basically corporate law says there's this doctrine called the business judgment rule where if you have a board that is not financially interested in the decision, and if the board is reasonably informed and is not irrational, the decision will stand. Legally, you cannot sue the directors for any action the corporation took. So I think that realistic levers here are transparency and better process. And on transparency, I did some original empirical work for the book. I surveyed the disclosures across two subsets of the S&P 500. I picked the S&P 100 and then the lowest one hundreds in the S&P 500. So corporation 401 to 500. And I found something that was a little sobering because, yes, the largest firms disclose far more than the smaller peers, but even they are selective because companies tend to publicize. And I gotta be specific, as when I did this. So I surveyed corporation right before the second Trump inauguration. So it was December. I looked at their disclosure as they were publicly available on December of 2024. Right. So the election took place, but you know, the administration hadn't stepped in it. And so companies back then tended to publicize that they were pursuing ESG goals, but they were staying silent on the related advocacy. So they would never say when and how and why they would intervene on sensitive topics like democracy and voting rights. Bear in mind that, you know, a few years before, several corporations did intervene quite vocally in the aftermath of January 6th. When I do my book talks, I show some screenshots of CNN business and there was a long list that took me like three screenshots of executives criticizing Trump in the aftermath of January 6th. But their disclosures don't say anything really about this, right?

[B]

About it, yeah.

[A]

So. So I would think the better disclosure, what companies do in this sphere, how and why, would serve firms own interest too, because it's how you build trust in the long run and how you defend your position when the heat arrives. And then there are process layers, right. Internal guidelines, when and how the company speaks, board oversized, maybe some disinterested directors, maybe a role for shareholders or for other, other stakeholder assemblies. You know, am I an optimist here? No, I'm more measure. Right. Market forces already discipline much of this. But if we add transparency in some process, then these phenomena, corporate governing 10 or 15 years from now can be less erratic and look more legitimate, which in turn won't make corporations democratic institutions because they shouldn't be treated like that. But it would make their inevitable presence in public life easier to live with.

[B]

I think a lot about advocacy, but I think your claim is governance itself, that many aspects, there's a void, a government void where the government is not producing basic things like housing, health, et cetera. And corporations, we increasingly rely on them for what may have once, or at least even some people now consider to be public goods. What's your view on that? Your thoughts?

[A]

Well, that's been going on forever. You know, the book starts with, you know, in the book, I, I describe what happened in mainly the 2010s and early 2020s. But you know, we, we go back, you know, the Romans launched something that is similar to modern day corporations, right. Since public bodies. And they were all for public goals, to attain public goals, whether they were, you know, cemeteries, whether they were schools, orphanages. Right. And that kept going over the centuries. You know, Middle Ages you have incorporations for universities.

[B]

Right.

[A]

We go back, of course, in the colonial era where the modern day corporation, right. In The Netherlands and in England they were created to help go run business in the colonies. And so in some ways they were tools of foreign policy. In the Progressive era is when we started to have health benefits and, and, and, and retirement benefits from corporations themselves because the government wasn't intervening there. So it's very disingenuous, I believe, to try to even define what's private and what's public because there is a lot, there are lots of blurred lines there. So there's always this symbiotic relationship between the two. I offer caution in the book as to try to say, okay, because we have so much dysfunction here in the US especially where politics is so gridlocked and has failed over the years to help citizens, then corporations are the only game in town and should embrace them as valid political actors. And I offer what I think is an honest answer that is two sided, right. In some ways this phenomenon complements democracy because it can amplify what citizens are really demanding. And so going back to the walkouts at Alphabet, at Microsoft, that helped foster momentum for legislation with mandatory arbitration. Right, right. But then there are problems that we cannot neglect. You know, corporate governing fails where corporate interests clash with broader societal needs. Like as I was mentioning before, worker rights, antitrust, privacy, financial regulation, AI taxes, the list is long. And also it's undemocratic in a specific sense that you know, decision makers are not elected and we the citizens cannot hold them accountable. Right. And it's even hard for shareholders to hold them accountable. I mean, this was one of the premises behind Citizens United. But all corporate scholars that you ask, they'll tell you that the Supreme Court got it really wrong because we don't really have very effective ways to counter this with the tools of quote unquote corporate democracy. Think about if Meta does something that we don't like, what are we going to do about it? You know, Mark Zuckerberg there is going to be the controlling shareholder for generations. His kids are going to be controlling shareholders. That's how it's built. So you know, there's that problem, right? And then the other big dangers that I found, and the book closes with this, is, you know, I call it the death of politics. So if citizens conclude that pressuring, let's say Apple works better than voting, we're in trouble. Because look, Milton Friedman and his acolytes claim that corporations cannot be political actors. You have to win elections in order to run this type of stuff. Corporations can. And I think that disingenuous in a way because it's Just another avenue for political actions among many to take place. And you sort of, you sort of can use it. But the advice that I want to give to our fellow citizens is that push corporations and use them, but be careful and never delegate to them. You know, keep all the other avenues open and running and you know, be careful who you're dealing with because again, they're not going to be your friends on all possible issues.

[B]

When our Constitution was made, we just passed the Fourth of July. They didn't really take it into account the role that corporations ultimately play. I mean, there's some indications that they were concerned about this, but I don't think they, it's not structurally, when you teach constitutional law, you're not going to talk about directly about corporations. It's more about political arrangements and institutional arrangements. I guess there would have to be a revolution in that area to rethink this. Is there anybody working about that?

[A]

Yes. I mean, this is an area where constitutional scholars are quite active and activists are quite active. Sorry. Because there are some instances of states that are trying to limit the political powers of corporations. Remember that corporations are states creatures. Right. It's the state that incorporates them. And so one of the things they're trying to do in Montana and Hawaii is to say, well, listen, I'm the state, I'm granting you incorporation rights, but I'm also regulating the breadth of the political rights that you can have if you want to incorporate here. And so there's this new avenue where you're trying to sort of undo Citizens United without a full blown constitutional amendment, because that comes in, know, with lots of hurdles and instead to say, well, you know, bunch of states are going to be explicit in saying if you incorporate here, you're not going to have all the, the freedoms that Citizens United awards you. Now whether this is going to be itself constitutional is open for debate. And there are some that argue that also this would not be constitutional. But again, I, that's not really my, my line of expertise. So I, that's something that I, I delegate to, to my, to my very able colleagues together.

[B]

Delaware and Nevada, those are the, the important states, I would think. Andy.

[A]

Yeah, and Texas. Yeah. And those would be the last ones. The last ones to. The last ones. Do a change there for sure.

[B]

Yeah. Okay, so what are you working on now? What is your current passion? You, you, you mentioned a podcast before. You, why don't you tell us? Research is about right now.

[A]

Appreciate. So some, some, some propaganda here. So my podcast is called like my book to keep it to Keep it simple. So it's called Corporate Power and the Politics of Change. It's run by ecgi, the European Corporate Governance Institute. And we are now we have published eight episodes and one and. And a couple more are going to be be posted before August, I believe and then a little bit of a pause and then we're going to resume. And the podcast is sort of deals at large with what my book is about. But instead of me talking in my podcast on my own book, which would be a little crazy, I invite scholars, legal scholars, but also economists that have influenced me in when I was writing and research, was researching and writing the book. And we talk about their scholarship that is pertinent to the themes of my book. So that's one another thing that I'm working on is with a colleague, Roy Shapiro, we are working on what we call ideological shareholder litigation. So if you want. This is sort of like a spin off of this. There are some plaintiffs out there that are suing corporations that are suing directors and officers for either doing a thing that is not quote unquote woke enough or for doing something that is too woke for them. So you have left leaning plaintiffs or right leaning plaintiffs. And we sort of try to. And this is different than the usual corporate litigation where we observe where you know, the plaintiff attorney is really an entrepreneur, takes a big risk to sue directors but you know, if they win, the payout is going to be large. You know, we have to think about them as you know, a gatekeeper of the of case cases that have merit versus meritless cases. Whereas these, these cases that are litigated on political grounds for the most part tend to be loser cases. But yet they are are entertained by plaintiffs because they create news. They also generate memos from law firms, they generate press. And so there's sort of like a transmission mechanism, if you will, that ends up influencing how corporate, corporate decision makers act. So you know, we're sort of like trying to open up the boardroom and trying to figure out whether this is impactful in how corporations board agendas are shaped. Whether or not these has real implications from the day to day working of you know, the general counsel and the executive suit office and the board. So that's another thing that I'm working on.

[B]

Who are the right now you consider some of the more influential thinkers, economists and lawyers or even beyond in this area that you think could help us deal with manage this dilemma going forward.

[A]

That puts me on the spot because all I say, and I'm going to be using my best Diplomatic skills is that I'm very happy with the guests that I am on my podcast that have some of the best of the best are there.

[B]

Who are these people? Who are some of these stores?

[A]

I have Marco Row. I have Jill Fish. I have Steve Bainbridge. I have Katarina Pistor. I have Riley Steele. I have An Lipton. I have Anil Kovali and Tom Lynn, Elizabeth Pullman, Roy Shapira. G. I have Riley Steele, G. I don't want Tim Smith with JE Fishels in the episode. I don't want to forget anyone. We have Elizabeth Kemp and Shano D. Pomroy. Yeah. So I'm trying to remember all the folks that were on it, but yes, we had a good, great guest. Yes. So those are among my favorites. But the podcast is continuing, so be on the look, because I'm going to invite more folks that are also very good at their gig because you think

[B]

the current equilibrium is unstable and we're going to see changes going forward, but they're not completely predictable because we don't know either how the broader political scene is going to change, and we also don't know really how corporations are going to respond.

[A]

Right.

[B]

Again. Right. And. And then.

[A]

And you know, with. With an extra. With an extra complication here, which is, as we said, the reversal carries several ramifications. And a reversal of a reversal would just look very dumb. Right. So. So some companies have confined themselves. Now, some will tell you that, yes, there's been a recalibration, maybe a reversal for some, but several corporations have kept doing what they were doing, just rebranding the effort. Right. Maybe you don't call it DEI anymore, but you still do the same thing with a different dress. So, um, we'll see. Maybe we will see some corporations protesting and saying, look, you know, we've. We're just dealing with the administration's pressures. But ultimately, if you look at our policies, they haven't changed that much over the years. So, you know, you'll see some, you know, acrobatics there, I think. And I'm sure that there'll be a lots, lots of gatekeepers that are going to try to name and shame these acrobatic efforts to revert again. We'll see. See, it's going to be interesting.

[B]

Yeah. Okay. This has been fascinating discussion of corporate power and the politics of change. The book challenges us to rethink one of the defining developments in modern capitalism. Corporations are no longer simply participants in markets, if they ever were. Increasingly, they are helping to shape the rules, norms, and public policies that govern those markets. Yet with that expanded role comes new strategic opportunities, new competitive risks, and profound questions about about democratic accountability. For listeners interested in how companies rebuild legitimacy after crisis, I'll mention once again my own book, Comeback, which examines how organizations recover through strategic renewal and renewed stakeholder trust. In many respects, today's discussion extends that conversation by asking how firms can maintain legitimacy while taking on increasingly public roles in society. Matteo Gotti thank you for joining me today, and thanks to all of you for listening. This is Alfred Marcus from On the cusp between Strategy and Ethics. If you have comments or suggestions for future books, please contact [e-mail]. thank you for listening to this episode of the New Books Network. We are an academic podcast network with the mission of public education. If you liked this episode, please share it with a friend and rate us on your preferred podcast platform. You can browse all of our episodes on our website newbooksnetwork.com Connect with us on Instagram and Blue sky with the handle ewbooksnetwork, and subscribe to our weekly Substack newsletter at newbooksnetwork.substack.com to get episode recommendations straight to your inbox.