The Political Economy of Corporate Exit

40 Pages Posted: 5 Sep 2017 Last revised: 27 May 2018

See all articles by Susan S. Kuo

Susan S. Kuo

University of South Carolina - School of Law

Benjamin Means

University of South Carolina School of Law

Abstract

Corporate political activity is understood to include financial contributions, lobbying efforts, participation in trade groups, and political advertising, all of which give corporations a “voice” in public decisionmaking. This Essay contends that the accepted definition of corporate political activity overlooks the importance of “exit.” Corporations do not need to spend money to exert political influence; when faced with objectionable laws, they can threaten to take their business elsewhere. From the “grab your wallet” campaign to the fight for LGBT rights in states such as Georgia, Indiana, and North Carolina, corporate exit has played a significant role in recent political controversies.

This Essay offers the first account of corporate exit as a form of political activity and identifies two basic rationales: (1) attaching economic consequences to public choices, and (2) avoiding complicity with laws that violate a corporation’s values. This Essay also shows how citizens can harness corporate economic power when conventional political channels are inaccessible. In an era of hashtag activism and boycotts sustained via social media, corporations cannot afford to ignore consumers, employees, investors, and other stakeholders.

Keywords: Exit and Voice; Corporate Political Activity; Mediating Institutions; Corporate Social Responsibility

Suggested Citation

Kuo, Susan S. and Means, Benjamin, The Political Economy of Corporate Exit. 71 Vanderbilt L. Rev. 1293 (2018). Available at SSRN: https://ssrn.com/abstract=3029506

Susan S. Kuo

University of South Carolina - School of Law ( email )

1525 Senate St.
Columbia, SC 29208
United States

Benjamin Means (Contact Author)

University of South Carolina School of Law ( email )

1525 Senate Street, Room 314
Columbia, SC 29208
United States
(803) 777-3616 (Phone)

HOME PAGE: http://sc.edu/study/colleges_schools/law/faculty_and_staff/directory/means_benjamin.php

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