Struggling to Prevail: Corporate Political Activism Dynamics Amidst Institutional Decline

The intricate interplay among markets, firms and institutions is key for maintaining sociopolitical and economic stability. This connection, usually explored through sociological and political lenses, can also be studied from the perspective of corporate strategies, more specifically, through corporate political activism (CPA). Peru, a Latin American country with a long colonial legacy, is a prime setting to understand how CPA can roam virtually unopposed (Durand & Cabtree, 2017). The country is as a paramount example of political capture by the main business players: the abundant natural resources, the enduring colonial institutional arrangements, the nationwide divides, its oligarchic past and the pro-market socio-political structure, have provided corporate elites with a significant access to the nation’s public institutions. Yet, the election of Pedro Castillo as president of Peru marked a breaking point in an already fast institutional and socioeconomic deterioration. His time in power and his tumultuous exit in 2022, exposed the progressive collapse of Peruvian democratic institutions and the instability of the country. This setting provides a unique opportunity to assess how corporate power and its relationship with the state evolves over time, which other players exploit the current political instability, and how traditional firms at large becomes contested. This new setting allows us to longitudinally study what we call CPA dynamics, namely the collection of institutional changes and corporate practices that explain the loss of effectivity in traditional CPA. Combining archival work with empirical research, our analysis departs from the codification of 47 interviews with prominent actors (20 CEOs or board members and 27 other socio-political agents) who play or have played a significant role in the political sphere of the country, who are part of the country’s corporate elite and/or have a specific knowledge of the current institutional crisis and the role played by the corporate world in it. These interviews aimed to understand their perspectives of the institutional crisis; the role the corporate world played in it and how this role was actually enacted (means, actions or processes); as well as their assessment of how corporate power and corporate political activism have evolved over time and which other actors played a role in the transformation of CPA. Our analysis concludes that several elements emerge to understand CPA dynamics: a) the diversification of actors produced by the same liberalization process that guaranteed the efficiency of CPA in the first place; b) the progressive loss of effectiveness of classical CPA due to the increasing congestion of CPA activity (i.e. declining power of mainstream media, elimination of counterparts for effective political dialogue, deterioration of state capacity, the legitimacy costs associated with the spread of corruption; c) the arrival of new forms of bottom-up CPA played by emerging actors; and d) the advent of new settings for CPA, previously identified as irrelevant by incumbent corporations.