This article has been reviewed according to Science X's editorial process and policies. Editors have highlighted the following attributes while ensuring the content's credibility: New research by a Florida State University professor in the Herbert Wertheim College of Business finds that America's increasingly polarized political system reaches far beyond the ballot box, creating greater uncertainty and higher costs for companies. As the Nov. 3 midterm elections approach, this research published in Strategic Management Review examines the challenges companies face when they engage in America's polarized political system and whether that involvement further deepens the divide.
"Understanding polarization, its sources and its consequences can help us keep things in perspective as we approach Tuesday's elections," said Michael Holmes, the Herbert Wertheim Distinguished Professor of Business Administration who co-authored the study along with Saint Louis University dean of the Chaifetz School of Business Leadership Jackson Nickerson. Central to the research are "political adjustment costs," the challenges that keep government from shifting from one stable set of policies to another. Deep partisan divisions can make legislation harder to pass, while greater reliance on actions such as executive orders raises the prospect of abrupt policy reversals between administrations.
The theory traces that instability to a deeper problem: weakening faith in the American dream. For many people, the traditional promise that hard work, education and employment will lead to financial security and upward mobility no longer feels attainable. Competing political parties offer sharply different explanations for that decline, they argue, making common solutions even harder to reach.
"Each political party places the blame in different places and, thus, champions different solutions," Holmes said. "The source of the blame and the policy positions are irreconcilable. The solutions nearly always involve increasing the deficit through lower taxes and higher spending." Structural incentives can then reinforce the polarization.
Holmes said the fundraising advantages of national political organizations give parties tremendous influence over their candidates, while campaigns built around emotionally charged issues reward partisan conflict rather than compromise. "Fundraising research suggests that arousing emotions and identifying common enemies increase fundraising," Holmes said. "Both parties paint the other as the villain and refuse to cooperate with the other.
They also tend to emphasize political issues which tug on emotions such as abortion, the environment, gun control and immigration." That dynamic puts businesses and executives, often powerful political donors, in a difficult position. They may feel pressure to participate in fundraising campaigns, but doing so can expose them to risk when political control changes hands. "Businesses are in a Catch-22," Holmes said.
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