How businesses can avoid getting ‘trumped’ by the White House

Like just about everyone else in the country, America’s chief executive officers are trying to figure out what life will be like under Donald Trump’s administration. If the last few weeks are any indication, business should buckle up.

Sure, Trump has promised tax cuts, the elimination of burdensome regulations and an infrastructure spending spree that has many business leaders salivating. But his crude attacks on individual companies has many CEOs on edge. Carrier got bribed and browbeat by the president-elect into keeping several hundred jobs in Indiana, while Trump’s tweets wiped billions of dollars from Boeing and Lockheed’s market capitalizations. The pattern has become sufficiently predictable that hedge funds are building trading algorithms to cash in when Trump lashes out.

Around the country, C-suites are on high alert. “What do we do if he comes after us?” is a question more CEOs than not dare to admit have asked their teams over the past month. Yet, while the president-elect’s behavior is unorthodox by U.S. standards, many global companies have seen this film before. In many countries, particularly fast-growing emerging markets where leading U.S. firms have focused much of their attention, one critical success factors is being tight with those in power.

When critics of the Carrier deal on both the left and the right blasted protagonists for engaging in “crony capitalism,” they deliberately used a concept made popular by the economic rise of the Asian Tigers such as Korea, the Philippines, Thailand, Malaysia and Indonesia in the 1980s and 1990s, and their subsequent economic collapse in the Asian financial crisis. Crony capitalism is nevertheless alive and well and remains the prevalent in major markets across Eurasia, Africa and Latin America.

{mosads}So what does the crony capitalist playbook look like? First, develop close personal relationships with those in power or, alternatively, their family members and close advisers. Second, know their political and personal interests and make sure that you don’t work against them and, ideally, find ways to promote them. Third, engage in symbolic acts that will please those in power. Fourth, heap praise on them whenever you can. And fifth, don’t cross those in power, especially in public. Wang Jianlin, China’s richest man, captured it succinctly when he summarized the key to his success: “make friends with the governments, but stay away from politics.”

Should business go down this path? Is the reported spike in last-minute event bookings at Trump’s Washington hotel a sign of things to come? U.S. companies would be well-advised to resist the temptation. Just because the president-elect brings his adult children to business meetings does not mean CEOs should do business with them.

Republicans may soon control all federal branches of power, but plenty of sources of oversight remain, from state attorneys general to non-governmental watchdogs and the media. Trump’s approval ratings have moved up since the election and six out of 10 survey respondents approved of the Carrier deal. But the nation’s 45th president will assume office considerably less popular than any of his modern peers as the country remains deeply divided.

In this volatile and highly polarized environment, companies need sound political strategies more than ever. A firm set of values, clear political positions derived from objective business priorities, and abundant transparency and accountability will carry business further than doing deals with the dealmaker-in-chief. From a broad coalition of leading U.S. companies calling on the president-elect not to turn his back on climate change to the flat-out refusal by U.S. technology companies to participate in building any “Muslim registry,” there is early evidence that leading U.S. firms will do just that.

It is, in fact, precisely how the most successful U.S. companies have long dealt with crony capitalists abroad—putting a premium on their reputation, thinking long-term and aligning their operations with the public interest rather than the personal preferences of the powerful. Much suggests the next four years will become a test for democratic institutions. They will undoubtedly become a test for business as well.

David Bach is senior associate dean and professor at the Yale School of Management, where his research and teaching include a focus on business-government relations and global market regulation.

The views expressed by contributors are their own and are not the views of The Hill.