by Matt Barr

Corporate self-interest

Chad the Elder at Fraters Libertas missteps:

One of the long-held articles of conventional wisdom that needs to be put to rest once and for all is the notion that U.S. corporations are politically conservative. Corporations have no core political beliefs. They care about one thing and one thing only: profits. Not that there's anything wrong with that....

[C]orporations support [a position] solely because they believe it will help their bottom line. And only THEIR bottom line. Not their industries bottom line and certainly not in the bottom line of their competitors. In fact, corporations will often call for more government regulation and less free trade if they feel it will help their competitive position.

Conceded that a business is in business to make a profit, in the same way, I guess, you could say that everything we do is motivated by self-interest, even selfless acts, which some say make us feel good and that's why we do them. But setting that to one side, the post goes a little too far.

Corporations most certainly do support positions and take all sorts of other actions to bolster their industry's bottom line. If you're Creative Labs, is the iPod revolution good or bad for the market for your Zen Touch? Right. If you're Cingular Wireless, are you interested in promoting and investing in the health of the wireless communications industry? Of course you are. It's the rare company indeed that is the only supplier of a need in the market.

Even more, companies are also often interested in their competitors' bottom line, even apart from their concern over the health and vitality of its own industry. A dominant player in a market may develop new ideas and products that smaller competitors can exploit and refine. Creative would rather everyone who bought an iPod Mini were buying a Zen Micro instead, but (I would guess, and that's all it is) is probably delighted to see Apple penetrating the market to the extent it does and creating brand new MP3 player users. Those are marketing and development dollars Creative doesn't have to spend and potential customers to whom they can market thusly: Like your iPod Mini but wish the battery lasted longer? Wouldn't it be great if it could also record classes at school and your own notes to yourself? And so on. You grow a business by farming brand new customers or poaching your competitors', and to the extent you care which, the latter is cheaper.

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