Power, Business

Many observers believe that the modern corporation is the most powerful institution in society today, eclipsing the power and resources of many governments. Some statistics uphold this point of view. One report published in 2000 indicates that when measured by company sales and country gross domestic product, 51 of the world's 100 largest economies are not nations or governments but in fact corporations. Among the top 200 global corporations measured by size, 82 were U.S. companies, and 41 were Japanese. Combined, these companies' annual income was 18 times that of the 1.2 billion people in the world who lived on less than $1 a day in 2000 (estimated to be about 1.1 billion in 2005). Furthermore, the report indicates that these companies' economic activities make up some 27.5% of the total of all economic activity but that they employ less than 1% of the total workforce.

Businesses have power in multiple arenas: economic, technological, political, and sociocultural. These arenas encompass economic power because of companies' control over financial, human, and material resources and technological power because businesses influence how quickly new developments in technology appear. Companies also have considerable political power through their efforts to influence public policy, laws, and associated regulations in their favor, through the use of political action committees, testimony before legislative bodies, and other tactics. They exert sociocultural power because business activities such as marketing and advertising as well as products and services influence both individual and societal norms and expectations and environmental power because of the pressures that business activities place on the natural environment. In addition, businesses not only have power over their own employees; because of this power, they also exert influence over families and community life in general.

Businesses today, particularly multinational businesses, command a good deal of resources and attention because of their power and influence. Companies incorporate for a variety of reasons, but among them are limitations to the risks undertaken by owners.

Incorporation allows owners to avoid taking on the debts incurred by the company, without which the debts of the company are also the debts of the owner; hence, incorporation grants owners limited liability. Incorporation also permits the company to develop an organizational form that allows for greater complexity, necessitating more coordination of activities, growth, and control of resources, and consequently the capacity to develop products and services that influence the purchasing behavior of customers. These benefits of growth and power have enabled large companies to produce goods and services desired by societies and individuals around the world.

The power of business is such that BusinessWeek magazine asked whether there was “Too Much Corporate Power?” in a cover story published in 2000. The magazine's survey of U.S. citizens found that although two thirds thought that businesses should get the credit for prosperity and that large corporations make good products that are globally competitive, nearly three fourths believed that businesses had too much power over their lives. In the survey, the American public perceived that large companies did not share productivity gains with their employees, the chief executive compensation was excessive, and there was a growing gap between the wealthy and the poor. In addition, the government, which traditionally put controls on corporate activities through legislation and regulation, and labor unions, which focus on obtaining good wages and working conditions for workers, lost power relative to corporations in the last part of the 20th century.

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